The questions are here
So here are the answers:
Can a country survive indefinitely on enormous levels of debt?
We’re finding out the answer to that one. Depends what kind of debt, but mostly, no.
Are we therefore now watching the decline and fall of a great empire, as Paul Kennedy predictednearly 20 years ago?
As ever-more Indians move to living in debt, should we be worried?
No. (One wonders, however, what ‘living in debt’ means)
What is the meaning of a massive government “bailout” to rescue the financial system, to rescue financial institutions — even if it has been rejected by lawmakers? Is this not a fundamentally socialist measure?
A ‘bailout’ in this case, is a large chunk of money, taken from taxpayers. Yes, this is a fundamentally socialist measure.
In essence therefore, how does this differ from India’s now-reviled move to nationalize banks in the ’60s?
This questions reveals 1 of 2 things – you are clueless, or you intentionally draw this comparison to provoke – and most intelligent people ignore your question. But I guess I’m not intelligent.
The 1960s nationalisation of Indian banks was to establish GOVERNMENT control over the economy wholly and completely, with no more say from private banks. The nationalised banks were never going to be sold back to private individuals or anything else.
The nationalisation of the 1-2 banks in America, today in this case is an extremely temporary measure, and these banks’ assets will either be sold to other private banks, or these banks will be ‘privatised’ again shortly. Yes, nationalisation is what this, and no, ‘IN ESSENCE’ this has nothing to do with the 1960s bank nationalisation.
If you cannot, ‘IN ESSENCE’, see any difference between what a nationalised bank branch in India looks like today, versus what the nationalised INSURANCE company AIG’s branch looks like today, please get your reading and comprension skills checked out by a licensed professional.
If certain individuals and institutions choose to take risks and get into trouble, even massive trouble, why shouldn’t they sink? After all, isn’t risk and its consequences — possibly great rewards, but just as possibly great disaster — fundamental to capitalism and free markets?
This is correct. They should be allowed to sink. And they have. Lehman Brothers no longer exists. Neither does Merrill Lynch (not as it used to, at any rate). In fact, it is a fundamentally socialist measure to prop up the companies. This was done because a) it is an election year, b) because rich businessmen and politicians are close cronies. It was done to prevent massive job losses and the recession depression which is going to follow. But of course, the part you leave out is that the government acted only when things got extremely out of hand and otherwise leaves the economy well alone to run as it was.
Is greed an Achilles heel of capitalism, just as the absence of individual incentive was an Achilles heel of communism?
Is this therefore the fall from grace of capitalism, just as the late 1980s were the downfall of communism?
No, because Capitalism doesn’t supress freedom of speech, doesn’t jail people in Gulags, and doesn’t give birth to people like you. I sometimes wonder if you even know what Capitalism means? Try this out for a definition:
Capitalism is the economic system in which the means of production are owned by private persons, and operated for profit and where investments, distribution, income, production and pricing of goods andservices are predominantly determined through the operation of a free market, rather than by central economic planning. – Wikipedia
So this statement still holds true.
Finally, it seems to me that so much depends on human psychology, even individual psyches. I mean, I know that as markets plunge, my own savings are vanishing into the ether. My instinct is to cut my losses and cash in those savings. Yet I know that if I follow that instinct, I simply accelerate the slide. Now maybe I can afford to resist that instinct, at least for a while. But how many others can resist?
Capitalism/Free Market Economics/Whatever does not make any value judgements. It simply tells you what will happen. Rational human beings would worry about their savings and withdraw – nobody is asking you to resist the urge. And this MIGHT accelerate the slide, if everyone was as dumb as you. I’m not. My money is still in the bank. And it hasn’t disappeared from there yet, nor will it.
What happens to the man looking forward to retirement next year, watching his retirement account melt away? What’s he going to do with his instinct? Multiply that by millions of people. Mix in the likelihood that eventually Americans will realize they cannot pay back the vast amounts they owe. Sprinkle on top the anxiety of investors in the American economy, pushing them to look at investing in, let’s say, Europe and its euros. What do you have now? Among other things, you have a manic Monday, when the Dow sank 777 points.
Yes, very good Sherlock. And therefore….what? The bit about somebody watching their retirement account melting away – that’s just plain platitude/bromide/cliche. You really don’t know where people have kept their money for retirement, have you?
Note: These questions were answered with the same level of naivete and (lack-of) depth of the questions. Enjoy.